The March Regulatory Compliance Briefing includes advisories and pending actions and alerts to be aware of this month.
CA-196 NCUA Final Rule on Cyber Incident Reporting
To be determined
The selected advisories and/or announcements below provide information that may be helpful to your organization but were not included as compliance alerts because they do not contain any regulatory changes.
On February 1, 2023, the CFPB issued a Proposed Rule that would make significant changes to the Reg. Z credit card late fee rules. The key proposed changes would: reduce the amount of the credit card late payment safe harbor fee to $8; eliminate the annual inflation adjustment for safe harbor late fees; and provide that late fee amounts must not exceed 25% of the required minimum payment. The proposed changes are limited to late fees at this time. The CFPB is seeking comment on whether the proposed amendments should apply to other penalty fees, such as overlimit fees and returned payments.
On February 2, 2023, the FDIC announced updates to the Risk Management Manual of Examination Policies. Specifically, the FDIC has updated Section 3.6 – Other Real Estate, including revisions for relevant accounting changes related to foreclosed real estate, with a focus on seller-financed other real estate, as well as other technical edits.
On February 3, 2023, the FDIC issued a Financial Institution Letter explaining its supervisory approach to HMDA compliance with respect to closed-end loan reporting, following the September 23, 2022 Order from the United States District Court for the District of Columbia regarding the loan-volume threshold. For closed-end mortgage data, the FDIC plans to implement a supervisory approach for FDIC-supervised institutions consistent with the CFPB’s approach. For FDIC-supervised institutions that (1) are subject to Regulation C’s other coverage requirements, and (2) originated at least 25 closed-end mortgage loans in each of the two preceding calendar years, but fewer than 100 closed-end mortgage loans in either or both of the two preceding calendar years, the FDIC does not intend to initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage loan data for 2022, 2021, or 2020.
On February 2, 2023, the NCUA issued a Regulatory Alert explaining its supervisory approach to HMDA compliance with respect to closed-end loan reporting, following the September 23, 2022 Order from the United States District Court for the District of Columbia regarding the loan-volume threshold. The NCUA intends to take a flexible supervisory and enforcement approach. The NCUA will not initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage loan data collected in 2022, 2021, or 2020 for credit unions that meet Regulation C’s other coverage requirements and originated at least 25 closed-end mortgage loans in each of the two preceding calendar years but fewer than 100 closed-end mortgage loans in either or both of the two preceding calendar years.
On February 6, 2023, the NCUA issued a Letter to Credit Unions enclosing a guidance statement to remind credit unions of the expanded opportunities to work with CUSOs and to address some of the primary related risks, following the November 2021 Final Rule. The Guidance document discusses credit risk, strategic risk, compliance risk, fair lending, UDAAP, and reputation risk.
On February 16, 2023, the NCUA issued a Proposed Rule that would amend its Chartering and Field of Membership Manual. The Proposed Rule would make nine changes to the Manual intended to enhance consumer access to financial services, while reducing duplicative or unnecessary paperwork and administrative requirements. The proposed changes would: revise the rules for underserved area additions and expansions, including streamlining application requirements; revise the rules for community-based field of membership, including expanding the community-based FOM affinities; and eliminate the business and marketing plan requirement for certain federally insured, state-chartered credit unions that seek to convert to a federal charter while serving the same community field of membership.
On February 1, 2023, the OCC issued a Bulletin to inform banks and OCC examining personnel that the loan origination threshold for reporting HMDA data on closed-end mortgage loans has changed, following the September 23, 2022 Order from the United States District Court for the District of Columbia. The threshold for reporting is now 25 closed-end mortgage loans originated in each of the two preceding calendar years. The OCC does not intend to assess penalties for failures to report closed-end mortgage loan data on reportable transactions conducted in 2022, 2021, or 2020 for affected banks that meet Regulation C’s other coverage requirements.
On February 1, 2023, the USDT issued a Proposed Rule to amend its regulations governing the payment of checks drawn on the United States Treasury. Specifically, to prevent Treasury checks from being negotiated after cancellation by Treasury or a payment certifying agency, the Proposed Rule would require financial institutions to use the Treasury Check Verification System, or other similar authorized system, to verify that Treasury checks are both authentic and valid. The Proposed Rule would also amend the reasons for which a Federal Reserve Bank must decline payment of a Treasury check to include prior cancellation of the check.
On February 23, 2023, the FDIC, FRB, and OCC issued a Joint Statement regarding the liquidity risks to banking organizations presented by certain sources of funding from crypto-asset related entities. The Joint Statement indicates that banking organizations that use certain sources of funding from crypto asset–related entities may be exposed to heightened liquidity risks due to the unpredictability of the scale and timing of deposit inflows and outflow. In light of these heightened risks, it is important for banking organizations that use certain sources of funding from crypto asset–related entities to actively monitor the liquidity risks inherent in such funding sources, and establish and maintain effective risk management practices.
For access to the complete analysis, executive summaries, and actions needed to ensure compliance, contact us.